What you pay for auto insurance is largely based on what kind of risk the company predicts you will be, based on known factors like your driving history, the kind of car you drive, your age and gender, your marital status and where you live.Carole Walker, RMIIA

Teens Shopping for Auto Insurance

Saving Money on Teen Auto Insurance Policies

So you've got your new driver's license and, as you're probably aware, it's illegal to hit the streets without auto insurance. You probably also know that insurance rates are based on how likely you are statistically to get into a crash. Unfortunately, as a first-time driver, the numbers aren't on your side. The risk of crash per mile driven is thee times higher for 16-19 year olds than for drivers age 65-69. But, there are some things teenagers and parents can do to save money on insurance rates.

Get on your parents' policy.It's usually cheaper to add a teenager to their parents' policy, rather than be insured separately. Most companies won't charge an additional premium until the teen is a licensed driver. Parents need to inform their insurance agent or company that their teenager is being added to the policy. Deliberate concealment could impact coverage.

Good grades pay off.Most insurers offer a discount, some as high as 25%, for students who maintain a B average.

Driver experience.Graduated Driver Licensing law requires teens to log 50 hours with an experienced driver, but taking a formal drivers training course will likely save on insurance. Many companies offer up to a 10% discount.

Penalties can land you back in the passenger seat.Death and injury are the highest price drivers can pay for drinking and driving, but even if you manage to survive, a D.U.I. ticket will cost teenagers big time. As a teen driver, you'll likely be cancelled and if you can get insurance, expect to pay a much higher rate for the next 3-5 years. Traffic crashes and citations will also impact your premium. Rack up more than three and teens face cancellation or non-renewal.

Drive an "insurance friendly" vehicle.Cars that are a favorite target for thieves, are expensive to repair, or are considered "high performance" have much higher insurance costs. Before you buy a car, contact your insurer to get a quote on what it will cost to insure.

Safety features and crashworthiness.Don't assume an old clunker is your best insurance bet. Newer makes and models are designed to be safer and discounts may be available if you have automatic seatbelts and/or airbags.

Shop around.Even for teens, rates can vary by hundreds of dollars. Also, if you can afford it, ask for higher deductibles.

Insurance safety programs.Some insurance companies such as SAFECO offer technology to help parents track teen driver behavior such as global positioning systems (GPS) which record where a car is driven and how fast. American Family partners with a company that installs in-vehicle cameras to monitor driver behavior.

Commonly Asked Questions About Auto Insurance

Q. Why is insurance so expensive for teenage drivers?

A. The cost of auto insurance varies from one group of drivers to another because some groups have worse driving records, higher accident rates and more costly accidents than others. The highest insurance rates are paid by any male driver under the age of 25. His rate then hinges on whether he's married and whether he owns or is the main driver of the car being insured. With the increase in young female drivers in the last twenty years, however, the accident rates between the genders are evening out. Drivers age 15 to 20 accounted for 10 percent of all drivers involved in fatal crashes in 2011 and 13 percent of all drivers involved in police-reported crashes. The number of drivers age 15 to 20 involved in fatal crashes totaled 4,347 in 2011, down 48 percent from the 8,325 involved in 2002.

Q. Can I be added to my parents' auto insurance?

A. If you drive a family car, you can be added to your parents' policy. However, the cost of the policy will increase. (Some companies insure young drivers only on a family policy.) If you have your own car, your parents' company may sell you a separate policy, but at a different rate than your parents.

Q. Do I have to be a certain age to buy my own insurance?

A. No. However, you must have a valid driver's license. Also, in many states, you must be 18 before you can own a car without an adult's name on the auto registration.

Q. How often do I have to renew my insurance?

A. Auto insurance policies usually last six months. Some last one year. You will receive a notice when it's time to renew your insurance.

Q. Will my rates go up or will I lose my insurance if I get into an accident or get a ticket?

A. If you are not at fault in an accident, your insurance should not be affected. If you are at fault, get a ticket for a serious violation (i.e. drunk driving), or are involved in an accident that racks up expensive property damage (i.e. crashing into a tree), your rates may increase at the time of renewing your policy because you will be categorized into another higher risk group of people who have recently been in an accident. You can no longer be placed into the accident-free group that you were in before the accident.

Q. If I loan a car to a friend who has an accident, is he or she covered by my insurance?

A. Under most circumstances, someone using your car with your permission is covered by your insurance. If the person borrows your car with your permission and is involved in an accident, your insurance will pay just as if you were the driver. However, in some states, some insurers may limit the coverage.

Q. Should I report all accidents to my insurance company?

A. Yes. You should report all accidents even if you do not end up filing a claim. If you don't report these incidents, you run the risk of being sued by the other people involved and your insurance company will be at a disadvantage in defending you.

Colorado Teen Auto Insurance Premium Examples

These auto insurance rate examples are from a large Colorado insurance company, based on one male and one female teen. While premiums will vary by driver and company, these examples clearly demonstrate that while teens as a group pay more for insurance because they are the highest risk drivers, as individual drivers, if teens follow the rules and are able to take advantage of all the safety discounts, they can significantly reduce what they (and their parents) pay for auto insurance. In this example, a young driver could see the price of their insurance more than double after one ticket and one accident.

Just to emphasize, the company used better than average coverage for our rate examples, not barebones coverage, so they are not the company's lowest prices. All are based on the teen driving a 2003 Honda, normal use.

Male Teen Driver

Newly licensed male teen
driver, 6-mo. auto policy

No tickets or accidentsGood driver, driver training, good student, and multi-car discounts

One ticket
Loses the good driver discount (others still apply)

One ticket and one accidentLoses the good driver discount, (other discounts still apply); includes an accident surcharge

Pueblo, CO

$1,101

$1,206

$2,637

Parker, CO

$994

$1,092

$2,430

Weld County, CO

$869

$953

$2,121

El Paso County, CO

$949

$1,042

$2,306

Female Teen Driver

Newly licensed female teen
driver, 6-mo. auto policy

No tickets or accidentsGood driver, driver training, good student, and multi-car discounts

One ticket
Loses the good driver discount (others still apply)

One ticket and one accidentLoses the good driver discount, (other discounts still apply); includes an accident surcharge